Safe Withdrawal Rate (4% Rule) Calculator Canada

What the safe withdrawal rate calculator does

How big does the portfolio have to be? The calculator starts from the spending you want, subtracts the government pensions you will receive regardless of savings, and divides the remainder by the rate you are willing to draw. It returns the required portfolio, the gap against what you hold, and the reverse view of what your current portfolio can sustain.

The rate is an input because it is a research assumption. 4% is the familiar number; 3.5% is what many Canadian planners use once fees and a longer retirement are allowed for; 3% might suit someone retiring at 52.

A worked example

You want $60,000 a year after tax, with a 12% average tax rate, 60% of maximum CPP and full OAS, and a $900,000 portfolio drawn at 4%. You need about $68,182 of pre-tax income. CPP provides about $10,855 and OAS $9,150, so the portfolio must supply about $48,177, which at 4% needs about $1,204,418, a gap of about $304,418.

The other way round, 4% of $900,000 is $36,000; with the pensions and after tax, that supports about $49,284 a year, about $4,107 a month, roughly $10,716 short of the target. Meeting the full target from this portfolio would mean drawing about 5.35%.

Why government pensions come first

CPP and Old Age Security are paid for life, indexed to inflation and arrive before you sell any investments. Because the withdrawal rate is small, each dollar of pension income removes about $25 of required portfolio at 4% and about $29 at 3.5%. Full OAS alone does the work of over $225,000 of capital at 4%, and a near-maximum CPP more, which is why ignoring the pensions overstates what you need to save.

CPP is entered as a share of the current maximum at 65 because it depends on your contribution record; OAS likewise, since a partial pension applies with fewer than forty years of Canadian residence after 18.

Tax is not an afterthought

Your average rate in retirement depends more on where withdrawals come from than on the size of the portfolio. RRSP and RRIF money is fully taxable; TFSA money is not taxed or reported; non-registered capital gains are half included; and eligible Canadian dividends carry a gross-up and credit that can leave modest dividend income taxed at close to nothing in several provinces. Two retirees with identical spending and portfolios can face very different rates, so model a range and rerun when your withdrawal mix changes.

Reading the two directions

Forward: gross up spending for tax, subtract pensions, divide by the rate, and compare with what you have; the gap is the savings target. Backwards: apply the rate to your portfolio, add pensions, subtract tax, and you have the spending the plan supports now. A positive surplus means the plan works at that rate; a negative one means it asks the portfolio for more than the rate allows.

Watch the rate your target actually implies. If it needs 5.5% while your plan assumes 4%, the plan is being run at a rate with a very different historical failure record.

What the model leaves out

This is a static calculation. It ignores the order of returns, the largest single threat to an early retirement, so use a Monte Carlo tool for that and treat this page as the first check. It also leaves out RRIF minimum withdrawals from the year after you turn 71, the OAS recovery tax above its threshold, lumpy spending and long-term care. Fees are best handled by lowering the rate: a portfolio with a full point of fees drawn at 4% is really being drawn at 5%.

How to use the result

Treat the required portfolio as a target and the gap as the size of the problem, then change one input at a time. A lower rate raises the required portfolio, the price of caution. Adding part-time income or a workplace pension in the other pension field lowers it sharply. Raising the CPP share to a full contribution record shows how much capital the public system saves you.

Every figure is an estimate in today’s dollars from the parameters and inputs shown, and is not financial advice. Your account mix, health, family situation and comfort with drawing a portfolio down all matter, so use these numbers to frame a conversation with a licensed advisor.

About This Tool: Safe Withdrawal Rate

Safe withdrawal rate: use this tool to get an instant, accurate estimate. The figures follow official guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.